Lenovo mobile sales drive 23 percent profit growth

AP and Bloomberg, Beijing

Fri, Aug 16, 2013 - Page 15

Lenovo Group Ltd (聯想) says it is evolving quickly into a supplier of wireless computing, driven by booming sales of smartphones and tablets as consumers shift away from desktop computers.

Sales of wireless devices rose 105 percent in the three months ended June 30, driving a 23 percent rise in profit to US$174 million, Lenovo announced yesterday. Total revenue rose 10 percent to US$8.8 billion.

Lenovo was declared the No. 1 PC maker in the latest quarter by research firms Gartner and IDC. However, that came as global PC shipments fell for a fifth straight quarter, highlighting the rapid consumer shift to mobile.

“We actually sold more smartphones and tablets than PCs in this quarter for the first time ever,” Lenovo chief financial officer Wong Wai Ming (黃偉明) said in a conference call with reporters.

PC shipments were flat and their share of total revenue fell to 28 percent. Laptop sales, which account for 52 percent of revenue, rose 4.7 percent. Mobile devices supplied 14 percent of revenue.

“We are impressed by Lenovo’s strong execution,” Barclay analysts said in a report. “It is the only Asia PC company that is able to deliver market expectation results, facing strong headwinds from concerns about global PC and smartphone demand, as well as a slowdown of China’s economy.”

Lenovo, with headquarters in Beijing and in Research Triangle Park, North Carolina, broke into the wireless market with the 2010 launch of its first smartphone.

It has since released more phones and Web-linked tablets to compete with Apple Inc, South Korea’s Samsung Electronics Corp and Taiwan’s HTC Corp (宏達電).

An update of its Thinkpad laptop released last year was designed to appeal to tablet users with features that mimic the quick startup and response times of mobile devices.

Other traditional technology leaders are also scrambling to shift emphasis to mobile products and to diversify into services as well as hardware.

Sales in China rose 5.6 percent to US$3.7 billion, providing 42 percent of revenue. In the US and the rest of the Americas, sales grew 29 percent to US$1.9 billion.

In smartphones, Lenovo said it became the world’s fourth-largest vendor during the quarter. Global sales rose 132 percent.

This year’s sales target is 50 million smartphones and 10 million tablets, chairman Yang Yuanqing (楊元慶) said. He said Lenovo is “very confident” it can meet that after the latest quarter.

“We are transforming our company into a ‘PC Plus company’ at full speed,” Yang said on the conference call.

The company said it is looking for acquisitions in PCs and smartphones as expanding share for those products boosted quarterly profit 23 percent.

“We are definitely seeking opportunities in both the PC and phone areas,” Yang said.

“The industry is in a period of consolidation, so we definitely should take the opportunity if we can find the right target,” he said.

Lenovo will be more “proactive” on acquisitions, Yang said, declining to name specific targets. Lenovo was in talks to buy part of International Business Machines Corp’s (IBM) server division until the two sides could not agree on a price, a person familiar with the discussions said in May. BlackBerry Ltd said it will consider takeover bids after almost a year of advisers unsuccessfully canvassing potential buyers. Yang declined to comment on whether the company would be interested in either IBM or BlackBerry assets.